Jessica Jaglowski will no longer be covered by Wisconsin's Medicaid program. She and her husband, Bill Bellin, will be shopping on HealthCare.gov for her insurance.

Erin Toner for NPR

Wisconsin Gov. Scott Walker is one of 25 Republican governors who are rejecting the health law's expansion of Medicaid. But Wisconsin's own Medicaid program, known as BadgerCare, is more generous than that of many states, and now Walker wants to transfer many people out of BadgerCare and into the insurance marketplace created by the Affordable Care Act.

It's a plan that allows Walker to reject a key part of Obamacare by turning down federal money offered to help states pay for the expansion of Medicaid. But it also may make it possible for Wisconsin to still provide health coverage to many of the state's poor and working poor residents.

And for a governor who appears to be gearing up for a 2016 presidential bid, that may not be a bad strategy.

"It's part of overall reform," Walker said in February when he announced the state's plan. The goal, he said, "is to get more people out into the workplace, more people covered when it comes to health care and fewer people dependent on the government, not because we've kicked them out, but we've empowered them to take control of their own destiny."

Walker's plan will open up Medicaid in Wisconsin to about 83,000 poor, childless adults starting Jan. 1. They were previously locked out because of a cap on the number of people who could be in the program.

Walker's maneuver is possible because the state's Medicaid program was already one of the more inclusive in the country. It allowed people making up to 200 percent of the federal poverty level to be covered by BadgerCare.

Now the governor wants to roll BadgerCare eligibility back to 100 percent of the poverty line, and put everyone making between 100 percent and 200 percent — a range of $11,490 to $22,980 for a single person — into private subsidized coverage that they buy on the new marketplace.

Walker says everyone losing coverage will be able to buy subsidized plans under the Affordable Care Act, and many will find monthly premiums under $20.

"You're going to hear some detractors claim that moving people to the private market or to the exchanges isn't affordable," Walker said in February. But he maintains that these critics aren't aware of how much the subsidies will bring down the cost of coverage.

Jessica Jaglowski is a stay-at-home mom in Milwaukee who recently got a letter from the state saying she would be dropped from Medicaid. Her husband will be able to get coverage through his job, and their kids can stay on Medicaid, so Jaglowski is the only one who will need to seek new insurance.

"It's somewhat comforting to hear that there are exchange options available, but we don't know what those will mean, and what will be covered, and what doctors we'll get to see," says Jaglowski. "It is very stressful, and it's overwhelming looking through the plans because we don't even know really where to start."

Walker's changes put Wisconsin in a unique position, says Judy Solomon, a health policy researcher at the Center on Budget and Policy Priorities, a think tank in Washington, D.C. The state is moving people off Medicaid, but everyone under the poverty line still has a chance at getting coverage, which isn't the case in all states.

"There is a positive part of the story, which is that everybody does have a pathway to coverage," Solomon says.

In some states that also rejected a full expansion of Medicaid, Solomon notes, there are adults who don't qualify for it yet, and are too poor to get subsidies on the exchange.

Solomon says Wisconsin is a longtime leader in serving the poor, and the state's decision to reject federal funds offered to the states to expand their Medicaid enrollment is puzzling from a fiscal perspective.

"It's ironic to me that when you have the pathway to providing a uniform system of coverage with the rest of the country, they've decided to go in the opposite direction," she says.

States that rejected a full expansion are seeing bigger increases in the Medicaid costs, Solomon says, citing a survey. And a nonpartisan review estimates Walker's plan will cost state taxpayers an additional $460 million through 2020 than if he'd gone for a full expansion that would have pulled more federal dollars into the state.

Governors who have rejected the federal funds for Medicaid expansion say it would be a short-term windfall that wouldn't cover the long-term costs of coverage.

Last week, Walker said he would tweak his plan because of the troubled startup of HealthCare.gov, the Web portal for 36 states that are relying on the federal government to run their marketplaces.

Walker says he will let people set to be dropped from Medicaid on Jan. 1 stay on the rolls three months longer, so they have more time to sign up for plans on HealthCare.gov.

"We are going to take decisive action to make sure that the people of this state, particularly people in need, do not fall through the cracks," Walker said.

The reprieve is likely to clear the state Legislature in the next few weeks.

Walker's Medicaid plan requires a waiver from the federal government, which is pending but expected to be approved.

Now, the story of how one influential opponent of the federal health care law is using it to trim his state's own health care coverage.

STEVE INSKEEP, HOST:

Wisconsin Governor Scott Walker is one of 25 Republican governors who are not expanding Medicaid, as allowed under the Affordable Care Act. Right now, his state's Medicaid benefits are more generous than most.

MONTAGNE: But Governor Walker is planning to transfer many people out of the Wisconsin Medicaid program to the new insurance marketplace created by the Affordable Care Act. The idea would allow him to reject federal health care money on the table, but still provide a way for many of Wisconsin's poor residents to get health coverage. Erin Toner of member station WUWM in Milwaukee reports.

ERIN TONER, BYLINE: Walker's plan opens up Medicaid in Wisconsin to around 83,000 poor, childless adults. They were previously locked out because of an enrollment cap. At the same time, Walker announced Medicaid is being cancelled for 77,000 people who have incomes barely above the poverty line.

GOVERNOR SCOTT WALKER: It's part of overall reform, where our goal is to get more people out into the workplace, more people covered when it comes to health care, and fewer people dependent on the government - not because we've kicked them out, but because we've empowered them to take control of their own destiny.

TONER: He says everybody losing coverage will be able to buy subsidized plans under the Affordable Care Act. Walker believes many will find premiums under 20 bucks.

WALKER: You're going to hear some detractors claim that moving people into the private market or to the exchanges isn't affordable. I think most people would find it hard to imagine that with the tax subsidies, that $19 a month is not somehow affordable. I think it is.

JESSICA JAGLOWSKI: (Reading) These changes will take effect January 1st, 2014. For more information on the new income limits, see the next page.

TONER: Jessica Jaglowski, a stay-at-home mom from Milwaukee, reads from a letter the state sent her and others getting dropped from Medicaid. Her husband will be able to get coverage from his job, and their kids can stay on Medicaid, so Jaglowski's on her own.

JAGLOWSKI: It's somewhat comforting to hear that there are exchange options available, but we don't know what those will mean and what will be covered, and what doctors we'll get to see. Yeah, it is very stressful, and it's just - it's overwhelming looking through the plans, because we don't even know, really, where to start.

TONER: Jaglowski is skeptical she'll find a $19 premium on the exchange, and she fears having to research brand new plans. Judy Solomon is a health policy researcher at the Center on Budget and Policy Priorities. She says Walker's reforms put Wisconsin in a unique position by bumping thousands off Medicaid, but still providing coverage to everyone under poverty.

JUDY SOLOMON: There is a positive part of this story, which is that everybody does have a pathway to coverage.

TONER: She says in some states that also rejected a full expansion, there's a group of adults who don't qualify for Medicaid and are too poor to get subsidies on the exchange. But Solomon says why Wisconsin, a long-time leader in serving the poor, would now reject free money to cover even more people is puzzling.

SOLOMON: It's ironic to me that when you have a pathway to providing a uniform system of coverage with the rest of the country, that they've decided to go in the opposite direction.

TONER: Solomon says Wisconsin's decision is also confounding from a fiscal perspective. She cites a survey showing states that rejected a full expansion are seeing faster growth in Medicaid spending. And a nonpartisan review estimates Governor Walker's plan will cost taxpayers $460 million more through 2020 than if he had gone for a full expansion.

WALKER: Good afternoon. Thank you, all of you, for coming here today.

TONER: Governor Walker remains opposed to expansion, though last week, he said he would tweak his plan because of the troubled Obamacare rollout.

WALKER: Because of that failure to be at the pace that the president's administration has communicated consistently to this state and to other states across the country, we're going to take decisive action to make sure that the people of this state, particularly people in need, do not fall through the cracks.

TONER: He says he will let those set to be dropped from Medicaid on January 1st stay on three months longer so they have more time to sign up for plans in the federal marketplace. The reprieve is likely to clear the state legislature in the next few weeks. For NPR News, I'm Erin Toner, in Milwaukee.

(SOUNDBITE OF MUSIC)

MONTAGNE: And that story is part of a collaboration between NPR and Kaiser Health News. Transcript provided by NPR, Copyright NPR.